In my continuing role as the very unofficial CUNA GAC Foreign Correspondent, here's another post that's kind of related!

I received this question through a Twitter DM yesterday from a fellow CUNA GAC attendee. That's a pretty loaded question to answer in 140 characters, but I'll give it a try.

"I'd give innovation in the CU industry a 5 out of 10. There are pockets to be sure, but for the most part, CUs have outsourced their brains."

By the way, that would be an Exactweet, "The wry satisfaction that comes from typing exactly what you want to say and ending up with exactly 140 characters used."

Rating innovation is all relative. While offering a mobile app to check your account balance may seem innovative, it's not at the same level as making the first mass-produced car

When I think of innovation, I think of companies and individuals who have fundamentally changed things. The Wright Brothers, Henry Ford, the two Steves at Apple who ushered in the future with the Apple 2, Mac, iPod, iPhone, etc. Bill Gates at Microsoft who made a bazillion dollars off of commercializing the operating system for the emerging PC market. Atari with the first game console. Alexander Flemming with the invention of Penicillin. Elon Musk with privatizing space and making the Tesla Model S. Or smaller innovative achievements like Southwest Airlines wiggling out a new niche in the crowded airline business. Howard Shultz and Starbucks through taking caffeine addiction to epic levels. You get my drift. Big, far-reaching inventions, significant commercial achievements and massive improvements get a 10 out of 10 in my book.

There are a few paradigm shifters in financial services. Intuit for pioneering simple accounting software for the PC. Visa and MasterCard for making credit cards universal. More recently, Square for parlayed that innocuous headphone port on smartphones into a hugely profitable payment company. Big banks are pretty innovative these days as well. PNC comes to mind with the Virtual Wallet, its killer banking application. Plus, if you ever have the opportunity to attend a Finovate conference, you'll see dozens of innovators in the fin-tech space either inventing brand new stuff or improving on what's already here.

There are pockets to be sure

But credit unions? They're not really in that highly innovative conversation. But, as I mentioned in my Exactweet, there are pockets of innovation. Here's five examples.

1) Working together. I really respect the scrappy, entrepreneurial nature of U.S. credit unions. When a few credit union leaders see a common need, they fill it by working together and creating a Credit Union Service Organization (CUSO) charged with filling that need. I would guess that 100 of the 300 vendors in the exhibit hall where CUSOs. That's impressive and innovative.

2) Thinking big. For the most part credit unions are too busy doing the business of credit unions to reinvent themselves on their own. That's why I think it's really innovative that the big credit unions and credit union organizations in the U.S. see a need to fund a dedicated industry think tank. The Filene Research Institute does really good work. From deep research to pilot projects, the work that Fliene does is needed. The bridges that the team has made with Ivy League academia and Silicon Valley startups are paying dividends and concepts like i3 and the The Cooperative Trust are innovative.

3) Providing access to members. Worldwide ATM access is now a given for credit union members in most developed countries, but the U.S. credit union system has really taken it up a notch with its shared branching networks. The ability to walk into any credit union on a shared branch network is unique to the U.S. system. It's an innovative application of the cooperation amongst cooperatives principle.

4) Speaking with a unified voice. I have spoken at some of CUNA's smaller conferences in the past, plus a bunch of league conferences, but it wasn't until I attended the Government Affairs Conference that I really understood how powerful and unified CUNA and the league system was. This powerful display of very coordinated political activism that gets high-ranking politicians to listen is innovative.

5) Education and nurturing next generation leaders. There is a really solid education ecosystem within the credit union industry. There is also a growing appetite to include young credit union professionals at league and national conferences. This is innovative and inclusive. Organizations like CUES, CUNA Councils and the National Credit Union Foundation (NCUF) work really hard to provide high-quality education to credit union employees of all levels. The CUES CEO Institutes have graduated almost 500 executives with MBA-level training from top universities. The regional CUNA Management Schools have advanced the careers of countless credit union executives. And anyone who has taken NCUF's Credit Union Development Education training swears by it. There are now webinars, online training and so many conferences available to credit union employees that take the initiative to advance their careers.

Credit unions have outsourced their brains

Then why is my score only 5 out of 10? This would be my average score. There are some 7s and 8s out there, but there are a lot 2s and 3s as well. This makes sense. Credit unions are highly regulated and aren't really in the innovation business, but it concerns me that credit unions are so beholden to third-party technology vendors. Core vendors, payment vendors, online banking system vendors, mobile application vendors, website vendors and so on. This is a double-edged sword. On the one hand, credit unions don't have the in-house talent or budget to invent or build all of this stuff themselves. On the other hand, this reality puts credit unions at the mercy of expensive third-party vendors. I also feel that technology, in general, is gobble gook to a lot of credit union CEOs and most board members. Today's credit union leaders should fundamentally understand the bells and whistles that they are buying and putting into place at their financial institutions. And many don't.

After the recent BarcampBank Seattle that I attend, technology journalist Ivan Schneider wrote a solid article, "Advice to Credit Unions: Innovate or Die" on this topic. Make sure to read the comment section as well to see what IT professionals outside of the credit union industry think about credit unions and innovation.

I know that credit unions are not on the bleeding edge of innovation. They never have been and they probably never will be. And that's OK as long as they look at the innovations in the marketplace and keep pace with what members want and need, they can let the innovators lead and draft close behind.

Tim

Tim McAlpine lives in Chilliwack, British Columbia, Canada. He is the President and Creative Director of Currency Marketing, an integrated marketing agency specializing in helping credit unions attract the next generation of members. Tim is best known as the creator of Young & Free.